To All The Hpc Poster That Think Germany

[ralphmalph]

Where did you go?

Munich, It had just been reported in the local papers that BMW was basically bankrupt and needed govt cash. As true Bavarians (i.e not Germans in there view) it seemed to be a source of shame to them after Hypo bank was such a diaster.

I go every month by the way and lived there for 5 years.

Edited May 16, 2009 by ralphmalph

[NotAGuru]

Only if they ditch the Euro, otherwise their economy will be dragged down by the basket case economies in the Eurozone

IMHO.

Hadn't realised that UK had joined the Eurozone

[Confounded]

So explain to me why the German Economy is cratering at twice the rate of the UK?

One word Election

but also

Firstly when you take into consideration the role Financial services play in our economy and their massive deterioration, the role construction plays and it's massive deterioration and the role manufacturing plays and it's massive deterioration I really do find our GDP figure incredible to point where I personally question them. The only thing growing atm is the public service! (a possible reason for the better growth)

Also just in case you have not followed much of the news recently the UK has adopted the strategy of borrowing to keep the status quo until the world picks up again (a bit like the approach by individuals to housing atm, a huge amount of denial and hope). I suspect this is a strategy you support and one of the reason why you are more optimistic on the UK economy (I personaly do not think any economy is going to do well for at least 5 years but it is all relative). The Germans have taken a strong views that the anglo Saxon economies are a shill and do not want to participate in the fiscal stimulus orgy for fear that they will repeat their painful Weimar Republic hyperinflation event, somthing much discussed on this site.

So in short the UK has a population deliberately kept in denial about our economic situation (they have noticed things are not right it is just it will all blow over soon) and our government has borrowed the most money in peacetime history in order to achieve this view. We have a bloated Public sector and welfare system that is being used to channel money into the economy at a time when the private sector surely has to be crumbling at a rate great than 4%. I am sceptical that this sort of illusion will work but I am also aware in a faith based economy the very act of restoring peoples faith through propaganda and short term papering over of cracks could lead to some sort of short term recovery or even just manage our decline down to where the fundamentals suggest we are heading. Borrowing more money in the hope that things get better when we have just had the best period of growth and increase in world living standards is optimism in the highest and the reason I fall in the negative camp on the UK economy.

What happens when the recovery fails to materials to the degree necessary to repay the colossal debts we have just taken on?

[John Talbot]

Lets see how things look in 5 years time. Japan and Germany along with the other exporter nations have taking a kicking because we have almost instantly stopped borrowing tomorrows income to spend today. They are going to have a tough time adjusting but if you think our service based HPI indebted consumer driven economy is sustainable you have learnt nothing form this crisis.

I remember people saying that 25 years ago. Yet the UK, Australia, USA, Spain, etc,. have outperformed Japan and Germany in the last 25 years. I do wonder how these so-called 'manufacturing' economies will cope when India and China start producing cars that can retail for $7000.00. I think they'll end up subsidising themselves to death, for example, the German coal industry.

[this_prisoner_is_opting_out]

What new markets? Is Sengal or Somalia suddenly going to transform from basically a hunter gather society to mass consumerism overnight?

Well these dumb-assed companies who've globalised themselves really do seem to think that if they pay a Chindian $400 a month then these people will start buying their expensive products. Morons! :angry:

[Confounded]

I remember people saying that 25 years ago. Yet the UK, Australia, USA, Spain, etc,. have outperformed Japan and Germany in the last 25 years. I do wonder how these so-called 'manufacturing' economies will cope when India and China start producing cars that can retail for $7000.00. I think they'll end up subsidising themselves to death, for example, the German coal industry.

Yes this is really where credit bubble economics (borrowing from the future) took over and producer countries effectively became slaves to the consumer/debt based countries. The balance was so out of whack it has formed incredible distortion that the producer countries are having to deal with now, yet again we have posponed our adjustment into the future through further borrowing.

You must be careful of judging success over such a short period of time (when judged against history), we have entered a new paradigm and our debts have become due, the success of each nation needs to be judged at least 5 and possible 10 years from now as the adjustments take place.

Anyone can create the appearance of success if they are willing to borrow and spend that money on creating the apperance, what we are finding out as the tide goes out many people have!

[BubbleBlower]

Here is some bear food from the Times analysing the reasons behind this drop in Germany's GDP and the possible implication. The quick summary for those too lazy to read is that Europe is fecked unless the Germans stop being quite so German about credit. The slightly longer summary for those who just can't be arsed to hit the link is:

The most plausible way for Europe to escape from this vicious circle will be for Germany to abandon its age-old philosophy of fiscal rigour, to embark on a large-scale fiscal stimulus and to guarantee the debts of all its partners in the eurozone. The present assumption in the financial markets is that, if conditions in Europe continue to deteriorate, the German Government will do exactly this.

[bogbrush]

Here is some bear food from the Times analysing the reasons behind this drop in Germany's GDP and the possible implication. The quick summary for those too lazy to read is that Europe is fecked unless the Germans stop being quite so German about credit. The slightly longer summary for those who just can't be arsed to hit the link is:

Fiscal stimulus my ****. I welcome the return of the authority of fundamentals; hard work, saving, investing, creating wealth. The Germans can do it and will adapt their ability to produce, while we printy printy and bloat the public sector.

Too many amateur economists around who believe all that Keynesian garbage.

EDIT: How predictable that the Times article is written by the arch-idiot Kaletsky. The man is a knob of the first order who thinks the answer to everything is to spend it all.

Edited May 18, 2009 by bogbrush

[bogbrush]

This sums up Kaletsky;

A government that borrows in its own currency will never default because, in extremis, it can always instruct its central bank to print money to pay its debts

As if debasing the currency of your debt isn't defaulting!

[BubbleBlower]

EDIT: How predictable that the Times article is written by the arch-idiot Kaletsky. The man is a knob of the first order who thinks the answer to everything is to spend it all.

Quite. He is a bit of a c0ck. In particular his arguments about sovereign default don't seem to add up. It was certainly the intention of Germany that this would be an effect of joining the Euro. The idea being that if a country knows it can't simply inflate its debts away then it will be more prudent with its money. It hasn't exactly happened yet, but ten years isn't long enough to see this change in attitudes.

It's still an open question which countries will fare better or worse in this recession, although I would guess the Eurozone has a better chance of a V-shaped recession than the UK. There is a huge amount of capital in Germany looking for a home, and they have quite a few options to stimulate demand without cracking out the printing presses.

[CokeSnortingTory]

How many BMW's and Mercedes would you see on UK roads if people had to pay the full price for them, in cash, up front?

And therein lies Germany's problem......

[Wuluf]

What new markets? Is Sengal or Somalia suddenly going to transform from basically a hunter gather society to mass consumerism overnight?

Looks like it happened already..

Yes GDP per person is low at circa 1700 USD (2005 est.) but calling that "Hunter-Gatherer" is a bit much..

Just like the UK, every country has its elites.

As for new markets see http://en.wikipedia.org/wiki/BRIC#BRIC_in_2050

The composition of the G7/G8 will be as follows

1 China 70,710,000

2 United States 38,514,000

3 India 37,668,000

4 Brazil 11,366,000

5 Mexico 9,340,000

6 Russia 8,580,000

7 Indonesia 7,010,000

8 Japan 6,677,000

Notice anything.. *

And if anything the current problems are going to speed up that process...

"Coming to a world near you soon"

* Hint: http://en.wikipedia.org/wiki/Racial_and_et...tes#Projections

[ralphmalph]

Looks like it happened already..

Yes GDP per person is low at circa 1700 USD (2005 est.) but calling that "Hunter-Gatherer" is a bit much..

Just like the UK, every country has its elites.

As for new markets see http://en.wikipedia.org/wiki/BRIC#BRIC_in_2050

The composition of the G7/G8 will be as follows

1 China 70,710,000

2 United States 38,514,000

3 India 37,668,000

4 Brazil 11,366,000

5 Mexico 9,340,000

6 Russia 8,580,000

7 Indonesia 7,010,000

8 Japan 6,677,000

Notice anything.. *

And if anything the current problems are going to speed up that process...

"Coming to a world near you soon"

* Hint: http://en.wikipedia.org/wiki/Racial_and_et...tes#Projections

You should read your own wiki article.

Look in 2008 UK is behind Germany in GDP in 2050 UK is ahead of Germany in GDP.

Makes my point for me, while your own link has crashed and burned your own argument.

[Deckard]

German Investor Confidence Soars More Than Estimated to Three-Year High

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Stop press - crash over - move along, nothing to see here

Edited May 19, 2009 by VoteWithYourFeet

[Wuluf]

You should read your own wiki article.

Look in 2008 UK is behind Germany in GDP in 2050 UK is ahead of Germany in GDP.

Makes my point for me, while your own link has crashed and burned your own argument.

My argument being

I think you may have replied to the wrong person..

[capitalist89]

Fiscal stimulus my ****. I welcome the return of the authority of fundamentals; hard work, saving, investing, creating wealth. The Germans can do it and will adapt their ability to produce, while we printy printy and bloat the public sector.

Too many amateur economists around who believe all that Keynesian garbage.

EDIT: How predictable that the Times article is written by the arch-idiot Kaletsky. The man is a knob of the first order who thinks the answer to everything is to spend it all.

Perhaps Britain will prosper by exporting wishful thinking to the rest of the world - judging by the FTSE at the moment we must be manufacturing massive amounts of it. In the meantime we even import 50% of our veg! We hardly make anything any more, we import massive quantities of food and North Sea oil is running out. Thank god that our nation's capacity for self-delusion appears limitless!

Wer hatte denn diese wahnsinnige Idee? Aber natuerlich - Der Gordon!

[Godley]

Perhaps Britain will prosper by exporting wishful thinking to the rest of the world - judging by the FTSE at the moment we must be manufacturing massive amounts of it. In the meantime we even import 50% of our veg! We hardly make anything any more, we import massive quantities of food and North Sea oil is running out. Thank god that our nation's capacity for self-delusion appears limitless!

Wer hatte denn diese wahnsinnige Idee? Aber natuerlich - Der Gordon!

And yet we are the worlds number 5. If we are number 5 and hardly make or sell anything god help the rest of the world.

[threesixty]

Very cool thread.

To me it looks like the west (UK/US) have everyone by nuts because like the old saying goes.. if you owe the bank 1 million it's your problem, but if you owe the bank 1billion pounds it's the banks problem! The UK has been such a big consumer of product using credit from the producer countries that a collapse of the UK means a collapse of the standard of living in the producer countries.

The two sides cannot exist without the other. Which is why the UK appears to have a "cunning plan" in this disaster.

All the other emerging economies (India, China etc..) cannot pick up the slack if the UK and US stop buying products at inflated prices. They cant afford £30,000 pound BMW's. The funny thing is , neither could we but we somehow convinced the manafcturing ecomies (i.e china) to lend us the money to buy the stuff they produce.. what an amazing scam!

It seems like the UK will win the battle on this technicality.. but for one small problem..

The emerging economies are used to being poor, but the UK isnt!

In a war of attrition where the credit lines of the western big spenders are cut, and therefore the prrofit margins of the manufacturing economies decline sharpley, who will scream first?

Whereas the Chinese, Mexicans and Indians can all cut back and live fairly cheaply and are used to it, the majority of the West would commit suicide without there PS3's, 2 holidays a year and 30k volvo's! Furthermore the UK imports 80% of its goods and doesnt produce alot of the products it needs to survive. We could turn into Cuba, driving around 2001 Mondeo's in 2030 because we cant afford the latest cars!

My point is that we cannot underestimate what the other side is prepared to do to get out of this downturn. If the chinese are prepared to cut the credit lines and live poor for a decade just to win, they could easily do that. This is a bluff of extremely high proportions by the UK. The reason why the US and Germany will fare better is because they could in the event of China doing the nuclear option (cutting credit) survive in a subsistance way (i.e. they build cars, chemicals, plastics etc..) and just live poorly for a while. I liken the scenario to how modern warfare has changed forever when you realise the enemy is prepared to blow themselves up just to kill you. It's a game changer!

I fear the UK has neither the will or the ability to survive if (or when) our bluff is called.

[Wuluf]

I liken the scenario to how modern warfare has changed forever when you realise the enemy is prepared to blow themselves up just to kill you. It's a game changer!

When did that happen??

[threesixty]

When did that happen??

When the US and the UK spent 5+ yrs stuck in green zones in Afghanistan and Iraq, too scared to actually fight because they didnt know who was going to blow themselves up in front of them.. Without suicide bombers do you think Iraq or Afghanistan would be as much of a problem? But I digress....

[tensecs]

And yet we are the worlds number 5. If we are number 5 and hardly make or sell anything god help the rest of the world.

I was told the following by one of my fathers friends who was a young man at the end of the last war and an engineer.

He toured a factory in Italy and saw that it was operating brand new American-built machines, thanks to the Marshall plan.

In Britain we were struggling on with pre-war (beautifully built) British Machines.

[BalancedBear]

You should read your own wiki article.

Look in 2008 UK is behind Germany in GDP in 2050 UK is ahead of Germany in GDP.

Makes my point for me, while your own link has crashed and burned your own argument.

Using a projection for GDP in 2050 to try and win a debate is complete rubbish. Blimey the BOE cannot even get 3 month projections right let alone other experts getting 50 year projections right!

[BalancedBear]

And yet we are the worlds number 5. If we are number 5 and hardly make or sell anything god help the rest of the world.

Well it all depends how it compares with what we import. Many countries in the world don't have the same wants or needs as the UK. The UK could be fine with its number 5 status. However it is not good enough to sustain the living standards that most in the UK want.

[ralphmalph]

Using a projection for GDP in 2050 to try and win a debate is complete rubbish. Blimey the BOE cannot even get 3 month projections right let alone other experts getting 50 year projections right!

I did not use it to justify my argument. It was used against my argument to prove that the German economic model is better than the UK's economic model and proved th opposite.

[Guest redwine]

. In the meantime we even import 50% of our veg! We hardly make anything any more, we import massive quantities of food and North Sea oil is running out. Thank god that our nation's capacity for self-delusion appears limitless!

Wer hatte denn diese wahnsinnige Idee? Aber natuerlich - Der Gordon!

when will the north sea oil run out? the oil industry have never given a date they have used this argument to put petrol prices (scarce oil high prices )

nearly all of europe imports fruit bananas pineapples etc